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US dealers from 5 states sue Indian truck maker

Mahindra would like to sell its pick-ups, like this one, seen at a Brazilian auto show, in the U.S. Image: BKM_BR/Flickr/CC BY

The Indian truck maker Mahindra and its U.S. arm are being sued by auto dealerships in five different states. The suit alleges the Asian firm is guilty of conspiracy, misrepresentation and fraud.

Dealers say they were duped

The suit was filed on June 4 in a federal court in Atlanta on behalf of auto dealerships in California, Florida, New Hampshire, New Jersey and Washington state.

According to the filing, hundreds of dealers promoted Mahindra Ltd. and Mahindra USA, Inc. while it duped them out of $9.5 million in cash and more than a $100 million worth of dealer trade secrets. Furthermore, the suit says, Mahindra never delivered on any of its promises.

Michael Diaz, of Diaz, Reus and Targ, one of the lawyers for the plaintiffs, said:

“Mahindra repeatedly failed to live up to its obligations. Now, after spending millions of dollars on behalf of Mahindra, the U.S. dealers have nothing to show for their time and energy other than a series of false promises.”

The lawsuit contends that Mahindra deliberately delayed submitting documentation to U.S. regulators because it intended to sever its agreements with the U.S. dealers. Meanwhile, it told the dealerships that its certification process was moving along.

Diaz said:

“Mahindra told the dealers that its light trucks and SUVs were ready for delivery to the U.S. market. However, Mahindra intentionally delayed certification of its vehicles after obtaining the dealership fees and trade secrets and began pursuing other partners in the U.S. and elsewhere in clear violation of their commitments.”

Conquering the U.S. market

Mahindra said it “unequivocally denies” all of the charges on its website Wednesday.

Mahindra is the largest tractor-maker in the world. It wants to introduce its Scorpio SUV into the U.S., as well as selling pick-up trucks.

The company, according to the lawsuit, has been trying to enter the U.S. market since 2004. It has made aggressive pitches to many U.S. dealers to include its trucks in company inventories. Mahindra’s CEO Arun Jaura even appeared at the 2007 Atlanta auto show, where he made repeated calls of “I love America,” to hock the hardware. However, its launch into the U.S. market, originally planned in 2009, has been repeatedly delayed.

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A history of legal action

The Sacramento Bee points out that a group of Missouri dealers earlier filed a similar suit against Mahindra. The judge in the case dismissed all charges against the automaker in a Missouri district court.

Mahindra was also sued in 2010 by Global Vehicles over a delivery agreement that did not come to fruition, according to Financial Times. Those charges were likewise dismissed by a London tribunal.